Washington Mutual, more affectionately known as "WAMU", has its
hands in many aspects of the mortgage and banking businesses.
For this reason, it is more able to take advantage of a lower
interest rate environment. In addition, its corporate clients
are generally small to medium sized companies who are the first
to step up their lending habits when interest rates drop. WM has
also been able to cash in on the refinancing boom since it
originates, sells and services mortgage loans. Turning to the
chart, WM has just broken out of an inverse head and shoulders
continuation pattern. Not only did it break up through its
neckline at $37 on Friday, but it did so on good volume of 5.5
million shares. WM typically trades 3.7 million shares. Going
forward, traders interested in initiating a position in WM could
look to do so on a break above Friday's high of $37.34 on volume
that puts the stock on track to do 4 million for the day. We are
placing our original stop at $35.00 to limit our downside risk.